The Relationship Between Air Conditioning Adoption and Temperature

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In this paper we are interested in understanding long-term trends in air conditioning adoption and how it varies between developed and developing countries as an indication of what might occur with regard to energy consumption. Some integrated assessment models attribute a large share of the damages due to rising global mean temperature to higher cooling expenses. The parameterization of the energy consumption modules of these models in many cases is rudimentary and relies on outdated studies of energy demand. The goal of this report is twofold: (1) provide a selective survey of the empirical literature on the adoption of air conditioning and its determinants, and briefly overviews existing datasets, which have been used to estimate energy demand for cooling; and (2) empirically examines the relationship among summer temperature, income, and the adoption of air conditioners in urban and rural China from 1995 to 2008. We conclude that the current penetration of air conditioning in China is similar to the rates observed in the United States in 1993 – 8–12% of the personal income levels – suggesting that developing countries adopt at much lower levels of income, which is likely due to lower prices and higher efficiencies of current air-conditioning units.